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Taking the risk out of unoccupied properties

With the number of unoccupied properties on the increase, we look at how to take the risk out of homes that are left empty for long periods.

By Steve Smethurst

In March 2019, the Liverpool Echo reported on a semi-detached house in the Appleton area of Warrington that had been empty for 25 years 1. It's one of several hundred 2 properties in the town that have been empty for more than six months.

A council spokesman told the newspaper: “We have tried to negotiate with the owner to either rent or sell this property but they have refused to do so.”

While this is an extreme example, the latest government figures show that the number of unoccupied properties in England has risen to their highest level for six years 3. More than 216,000 properties are now classified as being ‘long-term vacant’ (longer than six months).

It’s widely recognised that high levels of empty properties have a serious impact on the viability of communities 4 and London is the headline maker in this respect with 22,481 long-term vacant properties.

Even so, Greater Manchester has more than 10,000 with less than a third of London’s population 5.

And when you include Scotland, Wales and Northern Ireland, the organisation Empty Homes UK claims there are as many as a million empty properties in the UK at any one time, with 300,000 classified as long-term 6.

It’s a frustration for many and the numbers certainly seem high, particularly given the well-publicised difficulties in homing survivors of the Grenfell Tower fire in 2017 7 and the number of homeless on the streets (the latest government statistics show that more than 4,500 people were rough sleeping in England in autumn 2018, an increase of 165% since 2010).

AvivaPlus Home Insurance

Vacant? Lots

But why are so many homes standing empty? In some cases it’s due to an increase in ‘buy to leave’ purchases. This is where the buyer has no intention of living in a property, it’s simply a long-term investment without the complications of tenancy. It’s a strategy that relies on house prices continuing to rise and it’s proven successful for many wealthy (mainly overseas) investors, particularly in the capital.

However, this may be less of an issue in the future as London Mayor Sadiq Khan has promised to take action against London’s ‘ghost mansions’ and ‘zombie apartments’8.

Other reasons for a lack of occupancy are less to do with profit and more to do with personal circumstances. It might be a second home that’s left empty for much of the year, a holiday let that’s empty during the winter months or the sad consequence of an elderly relative going in to care or passing away. It might even be that a homeowner is away for an extended period with work or taking a well-earned sabbatical.

What do you need to do?

Whatever the reason, having the appropriate insurance cover is essential. Most domestic policies reduce the risks they cover after 60 days of unoccupancy as the likelihood of problems – from burst pipes to burglaries – increases in properties that are left empty.

This is standard practice across the industry says Jonny Cracknell, Aviva customer underwriting manager. “Aviva has a period of 60 days within our core policy and once that’s been exceeded, customers will need to notify us if the property is going to be unoccupied for longer. We’ll then need to understand the property and ensure the cover is adequate for the customer’s needs,” he says.

“The main risks – if there’s no one living at the home or it’s not inspected regularly – are damage through escape of water, theft and malicious damage.”

Cracknell continues: “We’ll need to have a conversation with the customer to see if they wish to purchase an additional premium to reinstate those covers, depending on the length of the period they need it for. If it’s just a couple of days over the 60, then it’s obviously very different to if it’s an extra six months.

“A lot depends on the circumstances – clearly the death of a policyholder is different to an extended holiday or a buy-to-let with no tenants yet in place. It might be that we’d advise the removal of certain belongings or valuables and taking them into their own care if no one is going to be at the property. Also to make sure someone is responsible for checking on the home to ensure any problems don’t go undetected.”

As Cracknell notes, Aviva’s standard home insurance will cover a property as long as it’s not left empty for more than 60 consecutive days. Beyond this, specialist cover is required, and the cost will be affected by the value of the property, its location, the length of cover being sought, the reason the home is unoccupied and the level of security at the property.

Physical security checklist

The last one of those points, security, is massively important. All insurers will want to know that you’re taking the necessary steps to keep an unoccupied property safe and secure, given a range of risks that stretch from burglary and squatters to burst water pipes and issues with damp and rodents. It’s also worth noting that each year there are around 9,000 fires in empty buildings.

You may find the following checklist helpful:

Remove all valuables

Fit approved, quality locks

Fit a timer for lights

Install a burglar alarm to deter thieves

Set up a postal redirection to avoid a clear sign of the occupants being away. You may also want to consider sealing the letter box

Consider draining the water system

Set the heating to the frost setting during the winter months to avoid burst pipes

Ask a neighbour to inspect the property, including outbuildings, at regular intervals

Ask a neighbour to park their car in the drive

Make regular visits to check locks and windows for signs of tampering

For the extra security conscious, install CCTV

Ensuring relevant cover

“The main message,” says Cracknell, “is to talk to us if you have a property that is going to be unoccupied for a period of time. Our response will vary depending on the situation but we’ll advise of any exclusions and give you the opportunity to reinstate them. It’s about ensuring the customer is aware of the policy cover they have, that it’s still relevant and they’re not paying for things they don’t need.